10.A company has sales of $87,500 at the break-even point and fixed costs are $35,000. Assuming cost behavior does not change if sales increase by $50,000, how much will operating income will increase by?

a.$8,000.00.

b.$4,000.00.

c.$12,000.00.

d.$20,000.00.

_______

11.When interpreting a CVP graph, which of the following is NOT correct?

a.The breakeven point is where the total revenue line meets the fixed cost line.

b.The anticipated profit or loss at any given level of sales is measured by the vertical distance between the total revenue line and the total expense line.

c.The total revenue line starts at the origin.

d.When sales are below the breakeven intersection, the company incurs a loss.

_______

12.The Work in Process inventory account of a manufacturing company shows a balance of $2,400 at the end of an accounting period. The job cost sheets of two uncompleted jobs show charges of $400 and $470 for direct materials and charges of $200 and $250 for direct labour. From this information, what predetermined overhead rate, as a percentage of direct labour costs, does the company appear to be using?

a.240%.

b.80%.

c.300%.

d.125%.

_______

13.The Watts Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labour cost in Department A and on machine hours in Department B. At the beginning of the year, the company made the following estimates:

Department A

Department B

Direct labour cost

$60,000

$40,000

Manufacturing overhead

$66,000

$90,000

Direct labour hours

6,000

8,000

Machine hours

2,000

6,000

What predetermined overhead rates would be used in Departments A and B, respectively?

a.50% and $5.00.

b.200% and $5.00.

c.110% and $15.00.

d.50% and $8.00.

_______